GDP, UE, and Inflation Test Honors

In the 1980’s and 1990’s, the gap between high income and low income families widened for all of the following reasons EXCEPT

• the sharp increase in the cost of living

• economy changing from a goods producing economy to service economy

• the decline of unions

• a widening gap between well educated and poorly educated workers

If a company lays off workers when the business cycle is going up (the economy is booming), what kinds of goods to this company most likely produce? 

• normal goods
• inferior goods
• technological goods
• capital goods

A rise in general price levels or too many dollars chasing too few goods are definitions of 

• unemployment
• recession
• inflation
• welfare

Why is disposable personal income an important factor in measuring the economy’s health? 

• when it is high, government debts are low
• it represents the actual money people have to spend, invest, and save in the economy
• when it is low, it shows that businesses are investing money back into the economy
• when it is high, it allows for higher government revenues and greater transfer payments

A business buys new computers for it’s office workers from a U.S. computer manufacturer. The value of the transaction would be included in which GDP category?

• consumer sector
• investment sector
• net exports
• government sector

• A = Recession
• A = Peak/Boom
• A = Expansion
• A = Trough

• D = Recovery/Expansion
• D = Recession
• D = Peak/Boom
• D = Trough 

Read the following excerpt, source: Kiplinger’s Personal Finance Magazine, September 1998.
"A booming economy. Record-low unemployment. A blizzard of pink slips [a note stating that a person has been fired].
What’s wrong with this picture? The fact is, even in the best of times hundreds of thousands of people lose their jobs through no fault of their own.... You might not get any advance warning, so don’t be caught off guard. Have an up-to-date resume and networking system.... You want to be able to launch your job search soon after you get the bad news."
What type of unemployment does the passage describe? 

• cyclical
• frictional
• structural
• seasonal

All of the following account for the growing income gap EXCEPT

• a decline in unions.
• a shift in employment from the manufacturing to the service industry.
• lessening wage advantages for the well educated.
• a shift from married-couple families to single-parent families.

Why is real GDP more accurate than nominal GDP? 

• It is adjusted for depreciation. 
• It includes unpaid and paid work.
• It is adjusted for price changes.
• It includes unrecorded business.